As with any major change in Michigan tax policy, I had questions about Proposal 1 when the legislation to put it on the Aug. 5 ballot came up for a vote in the Senate this spring.
I wanted to know how it would impact local communities when the Personal Property Tax (PPT) is eliminated, as many communities depend on it to fund important local services such as police and fire protection.
I wanted to know if it would raise taxes on working families, seniors and those who can least afford it.
Most importantly, I wanted to know if it was going to continue our state down the path of shortchanging our schools and our students.
Unfortunately, I didnít have the assurances I needed to answer those questions as the legislation was hurried through without the opportunity for any real debate, leading me to be one of only two senators to vote against it at the time.
Since then, however, the analyses done by local government officials and fiscal agencies have answered my questions and addressed my concerns. Now that I have those assurances, Iím confident Proposal 1 is right for Michigan.
Michigan communities will be reimbursed for 100 percent of the estimated PPT revenue lost for local services. Essential local services such as police, fire and ambulances, along with schools, libraries, roads and jails, will receive the same level of funding that the PPT provided.
Proposal 1 is paid for entirely by eliminating some of the billions of dollars in corporate tax breaks the state hands out and by a statewide Essential Services Assessment paid only by manufacturers receiving a PPT reduction. The resulting revenue stream for local services will be much more reliable than the PPT, which has been notoriously unstable.
I am confident Proposal 1 is good for local communities and good for local businesses.
No other state in our region taxes business equipment the way Michigan does, making us less economically competitive. Local small businesses pay sales tax on equipment when they buy it and then pay the PPT every year they own that equipment ó sometimes for decades.
Elimination of the PPT will help create jobs in our state and generate significant new business development right here at home. That kind of economic activity is good for everybody.
Steady, reliable funding for services keeps our residents safe and helps stabilize our local communities. Thatís why local leaders and organizations ó including the Michigan Association of Counties, Michigan Municipal League and Michigan Townships Association ó strongly embrace and support Proposal 1, which guarantees reimbursement of estimated lost PPT revenues.
Michigan communities deserve the stable, reliable funding for local services that Proposal 1 creates.
Thatís why Iíll be voting yes on Proposal 1.
State Sen. Gretchen Whitmer, D-East Lansing, is the Democratic leader of the Michigan Senate.